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How Will Property Prices Be Affected Due To COVID-19?

As Singapore reopens its economy in phases, and as we are currently in Phase 1, many of us are hoping to return to normalcy as soon as possible. As companies restart their businesses; the question on everyone’s mind is “Can we hope for our economy to rebound? What can we expect?” According to most economists, Singapore, like almost every country in the world, is on a slow route to regaining its economic momentum by re-skilling employees, creating new job opportunities and urging businesses to innovate. This begs the question – how will the property prices be affected?

The true answer is that nobody really knows certainly, not even industry experts who are able to merely predict. According to URA data, property prices dropped 1.2% in Q1 2020, the biggest drop since Q3 2016. Landed properties declined 1.7% while non-landed declined 1%. Will this decline continue in Q2 or will there be a quick rebound? But then again, in the months of February and March, sales for new property launches saw record transactions, which reflects local pent-up demand. Singapore real estate market, especially in CCR, is particularly attractive to foreign buyers in current times.

If Singaporeans are expecting prices to free-fall, they will be very disappointed. Singapore’s property market remains one of the most attractive to invest in, with the recent turmoil and unrest across Asia, Europe, and the United States, Singapore maybe the best place to invest in property right now. History has shown that after every recession, the Singapore property market rebounded back stronger than ever. Singapore’s resilient property market has weathered crisis after crisis as well as numerous rounds of Government cooling measures.

During the SARS crisis in 2003, total volume dropped 41% in Q1 2003 when it started and rebounded up 147% in Q3 2003 after the recovery. Even with the dip in sales volume, prices did not dropped drastically and within 5 years after the outbreak; prices strongly rebounded with some units more than doubling their value.

Most developers have kept their prices steady despite the circuit breaker measures whereas some developers are offering slight discounts to attract buyers during this period. With show flats closed and potential buyers being able to view virtually, a total of 293 units were sold in the month of April 2020. This shows the resilience of the Singapore market.

One development, Parc Clematis, a 99-year project developed by the SingHaiYi group, was offering discounts of between $10,000 to $60,000 depending on the unit type and managed to sell 9 units for the month of April.

Over at Kopar at Newton, instead of offering discounts, developer CEL group, has a different strategy and priced the project at a very attractive average price of approximately $2,200 psf. This strategy seemed to work well as 83 units were sold in the month of April 2020. This shows that despite difficult economic conditions, there will also be demand if the developments are attractively priced.

Source: Kopar At Newton

The only development that was having a fire sale is 38 Jervois; local developer Prominent Land was slashing their prices by up to $547,320 depending on the size of the units. This was to avoid having to pay ABSD (Additional Buyer’s Stamp Duty) as the project received its TOP (Temporary Occupation Permit) in March 2019.

Source: 38 Jervois

In addition to local interest and demand, overseas buyers are also on the lookout for investment opportunities. In a Straits Times article dated 26 May 2020, it was reported that wealthy Chinese investors are snapping up properties from Singapore to Sydney. With the current tense situation concerning Hong Kong and The United States, many Chinese are looking to safeguard their wealth against inflation and a likely weakening of their currency.

So if you have been looking to buy your first home or upgrade to a bigger home, now seems to be an ideal time as you may be getting your dream unit at a discounted price and you will be buying ahead of the anticipated rush when this pandemic is over.


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